2020 (7) TMI 469 - AT - VAT and Sales Tax

Re-opening of assessment - suo motu review proceedings - Levy of purchase tax - return of empty bottles from unregistered dealers - section 12(1) of the WB VAT Act, 2003 - HELD THAT - The assessment order has been passed after hearing the petitioner under section 46(1) of the VAT Act. The petitioner had produced the books of account and necessary records which were duly examined by the respondents. The petitioner was assessed for tax liability on the best judgment basis for various expenses as reflected in final accounts and also for tax on sale of plastic crates. Purchase tax under section 12 was also levied upon the petitioner and the petitioner was made liable to pay a sum of ₹ 59, after giving credit for tax paid/tax deducted at source during the concerned financial year. It also appears that the petitioner did not dispute the said liability and the assessment order had attained finality. The orders passed in the suo motu revisional proceedings on December 21, 2018, cannot be set aside on the point of law that the petitioner is not liable to pay tax on return of bottles from the dealers. Since report of Bureau of Investigation has been independently considered by the respondent authorities while undertaking suo motu revision, we are of the considered view that the said report of bureau of investigation cannot also be set aside. Application disposed off.

Issues Involved:
1. Validity of the suo motu review proceedings and the notice dated April 2, 2018.
2. Legality of the demand raised against the petitioner for purchase tax on return of empty bottles from unregistered dealers.
3. Applicability of the West Bengal Value Added Tax (WB VAT) Act, 2003 to the transactions involving return of empty bottles.
4. Interpretation of relevant legal provisions and judgments related to the nature of the transactions.

Detailed Analysis:

1. Validity of the Suo Motu Review Proceedings and Notice Dated April 2, 2018:
During the hearing on August 20, 2018, the State Representative admitted that Form 70 issued for the suo motu review proceedings could not be defended. Consequently, the notice dated April 2, 2018, was set aside, and leave was granted for considering a proposal for reopening the matter by the Senior Joint Commissioner, to be disposed of by December 31, 2018. The orders in the suo motu revisional proceedings were passed on December 21, 2018, raising a demand of ?29,67,236.25 against the petitioner. The respondents agreed not to take any action towards recovery of the outstanding demand from the said order.

2. Legality of the Demand Raised Against the Petitioner for Purchase Tax on Return of Empty Bottles:
The main issue pertains to the demand raised against the petitioner for the levy of purchase tax on the return of empty bottles from unregistered dealers under Section 12(1) of the WB VAT Act, 2003. The petitioner argued that the transaction involving the return of empty bottles does not constitute a sale or purchase but is merely a refund of caution money collected as per trade practices and relevant excise rules. The petitioner contended that the liability for purchase tax does not arise since the transaction is not a "sale simpliciter."

3. Applicability of the WB VAT Act, 2003 to the Transactions Involving Return of Empty Bottles:
The petitioner argued that the provisions of Section 12 of the VAT Act, 2003, apply only when unregistered purchases are not meant for purposes specified in clauses (a) to (i) of Section 22(4) of the VAT Act. The petitioner claimed that the return of empty bottles does not fall under these provisions and hence should not attract purchase tax. The petitioner also submitted that the provisions of Section 16(2A) and 16(2B) of the VAT Act, which deal with the tax rate for goods sold with containers, should apply, making the containers non-taxable if the main product is non-taxable.

4. Interpretation of Relevant Legal Provisions and Judgments Related to the Nature of the Transactions:
The Tribunal referred to various judgments and legal provisions to determine the nature of the transactions involving the return of empty bottles. The judgment of Richardson Hindustan Limited v. State of Maharashtra [1995] 99 STC 1 (Bom) was considered, where the return of goods was treated as a repurchase, allowing deduction from turnover of sales. However, the Tribunal noted that the principles from this judgment do not apply directly to the present case, as the facts and circumstances differ.

The Tribunal also referred to the Supreme Court judgment in Kalyani Breweries Ltd. v. State of West Bengal [1997] 107 STC 190 (SC), which dealt with the sale of beer bottles and the forfeiture of deposits for non-return of bottles. The Supreme Court held that the forfeited amount was liable to be treated as a sale and taxed accordingly. However, the Tribunal noted that in the present case, the petitioner had already paid sales tax on the composite sale price, including the bottles, and the return of empty bottles was not treated separately as a deposit or caution money.

Conclusion:
The Tribunal concluded that the return of empty bottles constitutes a purchase under Section 2(34) of the WB VAT Act, 2003, as there is a transfer of property in goods (empty bottles) for valuable consideration. The orders passed in the suo motu revisional proceedings on December 21, 2018, were upheld, and the demand raised against the petitioner was deemed valid. The report of the Bureau of Investigation was also not set aside, as it was independently considered by the respondent authorities. The application was disposed of, and the interim stay against the outstanding demand was vacated.

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